Review this week's industry settlement conditions.
Reporting Week Summary
Settlement Friction:
STABLE
Cost & Spreads:
MODERATELY ELEVATED
Rail Reliability:
STABLE
Risk & Compliancel:
STABLE
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The Death of Omnibus Risk in OTC Markets
Paper Summary
This paper examines why omnibus risk structures have become structurally misaligned with institutional OTC markets. As transaction volumes, client heterogeneity, and balance-sheet intensity increase, pooled exposure models that once appeared efficient begin to concentrate risk in ways that are difficult to observe, govern, or contain. The scope of this paper is limited to post-execution risk structure. It does not address execution quality, liquidity sourcing, or pricing strategy. The focus is on how counterparty exposure, settlement obligations, and balance-sheet usage are organised once trades are agreed. The purpose is to explain why segregation is no longer a regulatory preference or operational optimisation, but a necessary response to how risk behaves at institutional scale.
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